Retained Earnings / Balance Forward Accounts

How does the 920 Retained Earning account work?

Retained earnings refer to the percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business, or to pay debt. It is recorded under equity on the balance sheet. Retained earnings in Cashbook is the total equity recorded over the life time of the business.

Retained Earnings is a Balance Forward Account. A balance forward account is an Equity type account used for consolidating equity type account balances at year end roll over. For example, a partners Drawings account or Current Year Profit and Loss account might be balanced forward to their retained earnings account.